GLOBAL MARKETS: Asian shares rose after U.S. Federal Reserve Chairman Ben Bernanke kept the door open for further stimulus if needed, while weak economic indicators across the region raised hopes for additional growth-bolstering steps in Asia as well. European stock futures pointed to a lower open, with a survey showing a contraction in China's manufacturing activity dampening sentiment and prompting investors to trade in a tight range before this week's meeting of the European Central Bank.U.S. stocks rose on Friday after Federal Reserve Chairman Ben Bernanke, expressing "grave concern" for the stagnating U.S. job market, said the central bank was prepared to take further steps to strengthen the economy if necessary. (Reuters)

FOREX: The euro steadied against the dollar, drawing support from hopes the U.S. Federal Reserve and the European Central Bank would soon take policy steps to revive their respective economies. (Reuters)

FOREX-Euro steadies; Aussie hit by weak China, domestic data
TOKYO, Sept 3 (Reuters) - The euro steadied against the dollar drawing support from hopes the U.S. Federal Reserve and the European Central Bank would soon take policy steps to revive their respective economies.
The Australian dollar fell to fresh six-week lows against both the dollar and the yen as the market reacted in dismay to more signs of weakness in the Chinese economy and a set of weak Australian data.

Bernanke says Fed ready to act but short on specifics (Reuters)
Federal Reserve Chairman Ben Bernanke on Friday left the door wide open to a further easing of monetary policy, saying the stagnation in the U.S. labor market was a "grave concern," but he stopped short of providing a clear signal of imminent action.

China official services PMI rises to 56.3 in August (Reuters)
China's official purchasing managers' index for the services sector rose to 56.3 i n August from 55.6 in July, but industry expectations are weakening, a survey from the National Bureau of Statistics showed on Monday.

Isaac's remnants bring rain to drought-hit US Midwest (Reuters)
The remnants of Hurricane Isaac brought rain to drought-stricken parts of the lower U.S. Midwest on Saturday after the storm killed at least 30 people on its trek across the Caribbean and Louisiana and Mississippi, authorities said.

Energy firms boost US Gulf oil, natgas output after storm (Reuters)
Energy companies were restoring offshore oil and natural gas production and restarting refineries on Sunday as the recovery from Hurricane Isaac shifted into high gear.

OIL: Brent crude edged lower after Chinese data pointed to a further slowdown in the world's No.2 oil consumer, but prices stayed above $114 per barrel as investors remained optimistic that more global economic stimulus measures may be on the way. (Reuters)

China's Tianjin sets 2015 coal consumption cap
LONDON, Aug 31 (Reuters Point Carbon) - The Chinese city of Tianjin has set an absolute cap on coal consumption in 2015 at 63 million tonnes, an increase of 31.3 percent from 2010, indicating that carbon emissions will continue to grow strongly even after the city launches an emissions trading scheme next year.
The city of 13 million people located just south of Beijing has capped coal use to reduce the fossil fuel's share of the energy mix to 40 percent by the middle of this decade, according to statements on municipal government websites Thursday.

Asia Coal-Australia coal prices dip, global oversupply weighs
PERTH, Aug 31 (Reuters) - Australian coal prices dipped during the week, despite an increase in interest from Chinese buyers as a global oversupply of coal continued to keep the market bearish.
Prices have likely hit a bottom, however, market sources and analysts said, as production cuts globally begin to take effect.

Strike deadline nears for two steelmakers in U.S. (Reuters)
Some U.S. steelworkers could mark the Labor Day holiday on strike if negotiations for new employment contracts with U.S. Steel and ArcelorMittal break down by Saturday's midnight (0400 Sunday GMT) deadline.

China's steel traders expose banks' bad debts
SHANGHAI/HONG KONG, Sept 3 (Reuters) - China's banks are coming after the country's steel traders, hauling executives into court to chase down loans that some traders said they didn't initially need and can't now repay.
The heavy push to recover the loans is another sign of strain on China's financial system at a time when the country's leaders are contemplating another round of stimulus to boost the economy, and when banks are worried about bad debts piling up.

China's Jiangxi Copper starts new 400,000 T product plant
HONG KONG, Aug 31 (Reuters) - China's top refined copper producer Jiangxi Copper Company said it had started trial production this month at a 400,000-tonne-per-year manufacturing plant that uses refined copper, boosting demand prospects in the world's largest copper consuming country.
China's implied consumption of refined copper fell 0.8 percent in the second quarter of the year from January-March as the economy grew at its slowest pace in three years. In the second quarter of 2011, implied consumption rose 5.7 percent.

Iron Ore-Shanghai rebar drops after China data, ore pressured
SINGAPORE, Sept 3 (Reuters) - China steel futures fell more than 1 percent on Monday after data showed the manufacturing sector in the world's top steel consumer continues to struggle, suggesting a near-term recovery in demand is unlikely.
That puts more pressure on iron ore prices, which stayed near their lowest level in close to three years, despite a modest bounce on Friday.

Despite China slowdown, Australia miners bet on Africa
PERTH, Aug 31 (Reuters) - Australian miners are betting that Africa will be the next frontier for iron ore, as they look beyond a fall this week in the price of the steel-making ingredient to its lowest level in nearly three years, battered by cooling Chinese demand.
African countries could eventually rival Pilbara, Australia's main iron ore mining region and producer of about half of the world's seaborne iron ore supply, mining executives gathered at a meeting in Perth said on Friday.

BASE METALS: London copper edged higher on hopes that central banks around the world will step in to fuel economic growth after concerns about the U.S. jobs sector and gloomy China factory data. (Reuters)

PRECIOUS METALS: Gold hovered near a five-month peak, supported by hopes for more stimulus measures after U.S. Federal Reserve Chairman Ben Bernanke gave a grave assessment of the economy last week. (Reuters)

METALS-Copper up on economic stimulus hopes after gloomy China data
SINGAPORE, Sept 3 (Reuters) - London copper edged higher on hopes that central banks around the world will step in to fuel economic growth after concerns about the U.S. jobs sector and gloomy China factory data.
A contraction in China's factory sector activity intensified in August as both output and new orders dropped while manufacturers cut prices to compete for business, a survey showed on Monday.

PRECIOUS-Gold near 5-month high on stimulus hopes
SINGAPORE, Sept 3 (Reuters) - Gold hovered near a five-month peak supported by hopes for more stimulus measures after U.S. Federal Reserve Chairman Ben Bernanke gave a grave assessment of the economy last week.
Bernanke left the door wide open to a further easing of monetary policy but gave few hints on any imminent action. Gold benefits from loose monetary policy, as rampant cash printing boosts inflation outlook and drives investors to gold, seen as a good hedge against rising prices.

VEGOILS-Palm oil edges up on exports, Bernanke - RTRS
Sentiment positive on further stimulus hopes Malaysia's August exports jump 17.7 pct -ITS Palm oil to end rebound below 3,067 ringgit -technicals
By Anuradha Raghu
KUALA LUMPUR, Sept 3 (Reuters) - Malaysian crude palm oil futures rose on Monday on strong exports last month and after U.S. Federal Reserve Chairman Ben Bernanke kept the door open for further stimulus that could prop up global growth and support commodity demand.
Palm oil exports posted an 18 percent gain in August from a month ago to the highest level this year, cargo surveyor Intertek Testing Services said on Friday, in part boosted by the edible oil's huge discount to competing soyoil. PALM/ITS
"Exports were very good, the market is going for a temporary upward trend," said a trader with a foreign commodities brokerage in Malaysia. "Bear in mind that soyoil is stil trading at a premium over palm oil by $285. All these factors are a plus for palm oil," he added.
By the midday break, the benchmark November 2012 contract FCPOc3 on the Bursa Malaysia Derivatives Exchange rose 1.2 percent to 3,055 ringgit ($982) per tonne. Futures posted a 1.6 percent loss last week after two straight weeks of gains.
Total traded volume stood at 14,151 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technicals look bearish as palm oil is expected to end its current rebound in a resistance zone of 3,050-3,067 ringgit, followed by a drop towards 2,978 ringgit, said Reuters analyst Wang Tao.
But market sentiment remained positive on healthy export demand for palm oil and after the minutes of the last meeting of Fed policymakers suggested that the central bank was leaning towards further stimulus to boost the economy.
Exports surged to 1.45 million tonnes in August, bolstered by higher shipments of crude products and a demand recovery from major food buyers China and India.
Another cargo surveyor Societe Generale de Surveillance will issue August exports data later in the day. PALM/SGS
Brent crude edged lower on Monday after Chinese data pointed to a further slowdown in the economy of world's No.2 oil consumer, although prices stayed above $114 per barrel as investors remained optimistic that more global economic stimulus measures may be on the way.
In other vegetable oil markets, the most active January 2013 soyoil contract DBYF3 on the Dalian Commodity Exchange jumped 2.7 percent to a contract high by the midday break. The U.S. soybean futures markets were closed for the Labor Day holiday.

GLOBAL MARKETS-Asian shares inch lower after Bernanke as data in focus
TOKYO, Sept 3 (Reuters) - Asian shares eased on Monday after U.S. Federal Reserve Chairman Ben Bernanke kept the door open for further stimulus if needed, while stopping short of giving any clear direction about an imminent move, prompting investors to look for clues in upcoming data.
"The message came through that conventional measures would probably persist, with measurable results, and that anybody waiting for unconventional wild methods would have to keep waiting," said Richard Hastings, macro strategist at Global Hunter Securities.

U.S. could go it alone with oil release
(John Kemp is a Reuters market analyst. The views expressed are his own)
LONDON, Aug 31 (Reuters) - With Italy and Germany continuing to resist the release of oil from emergency stockpiles, attention will turn to the possibility of a unilateral release by the United States, possibly in conjunction with allies like Britain and France.
The symbolism of a multilateral release would clearly be preferable for the White House since it would maximise the impact on global oil markets and limit criticism that the president is manipulating oil prices to help his re-election campaign.

OIL-Oil posts 2nd monthly rise, tops $114 after Bernanke
NEW YORK, Aug 31 (Reuters) - Oil rose above $114 a barrel in volatile trading on Friday, taking gains in August above 9 percent, after U.S. Federal Reserve Chairman Ben Bernanke stopped short of signalling extra monetary easing was imminent but kept the door open for action.
"There was no announcement about if more stimulus was coming immediately, but he (Bernanke) said the Fed was ready to act if necessary so that was supportive," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Germany, Italy stay opposed to IEA oil release
ROME/BERLIN Aug 31 (Reuters) - Germany and Italy remain opposed to a release of consumer country emergency oil stocks, arguing world markets are amply supplied despite lower Iranian crude output, senior government sources in Rome and Berlin said.
German and Italian opposition creates further uncertainty about the timing of a possible drawdown of stocks after G7 finance ministers issued a surprise statement on Tuesday saying they were ready to call on the International Energy Agency (IEA) to take action.

Energy firms boost US Gulf oil, natgas output after storm
HOUSTON, Sept 2 (Reuters) - Energy companies were restoring offshore oil and natural gas production and restarting refineries on Sunday as the recovery from Hurricane Isaac
shifted into high gear.
Shut offshore oil output in the Gulf of Mexico was down 22 percent from Saturday's 93.53 percent and natural gas output was down nearly 10 percent from 65.26 percent shut a day earlier, the U.S. Bureau of Safety and Environmental Enforcement said on Sunday.

Iran says oil exports unaffected by sanctions
DUBAI, Sept 2 (Reuters) - Iran's oil exports are at their normal levels and are unaffected by Western embargoes, an Iranian oil official was quoted as saying on Sunday.
Iran's top oil customers have slashed Iranian purchases under pressure from European Union and U.S. sanctions that aim to squeeze Tehran's oil income and curb its nuclear programme.

Russia's Aug oil hits post-Soviet high of 10.38 mln bpd
MOSCOW, Sept 2 (Reuters) - Russia extracted oil at a record pace of 10.38 million barrels per day in August, a level unseen since the collapse of the Soviet Union, as companies took advantage of high oil prices, Energy Ministry data showed on Sunday.
Russian oil output, the world's largest, edged up 0.4 percent in August from 10.34 million bpd in July. In tonnes, the ministry said crude production in Russia stood at 43.89 million last month.

Iraq oil exports rise to 2.565 mln bpd in August-SOMO
BAGHDAD, Sept 1 (Reuters) - Iraq's oil exports rose to 2.565 million barrels per day (bpd) on average in August, their highest level for three decades, the head of the State Oil Marketing Organisation (SOMO) told Reuters on Saturday.
Iraq exported 2.516 million bpd in July.

NATURAL GAS-U.S. natgas futures end up for 3rd day on near-term weather
NEW YORK, Aug 31 (Reuters) - U.S. natural gas futures ended higher on Friday for a third day, backed by warm weather that should boost air conditioning demand for the next few days, but bloated supplies and the milder mid month outlook were expected to keep buyers cautious.
"There is still a lot of production shut in from Isaac, and the weather is hot this week and next week, so people are expecting a low storage build next week," said Steve Mosley at SMC Advisory Services in Arkansas.

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said the highly accommodative monetary policy environment has generated higher global liquidity. It has contributed to the recent surges in capital flows to emerging economies. “These inflows have resulted in significant strengthening of our currencies, rising asset prices, credit growth and for some, overheating conditions in our economy. This has been partially offset by deleveraging in developed economies,” she said. “For an open economy where exports are more than 150% of GDP, that has consequences on our economy,” she added. For emerging Asian economies “an important policy shift is to rebalance our economies and diversify our sources of growth” and “promote domestic demand, in particular domestic consumption”, she said. The growth of Asia’s domestic banks had “allowed the financial intermediation process to continue without disruption during the recent global financial crisis”. Emerging Asian economies will “continue to be vulnerable” to these global shocks. “To be in a better state of readiness and to withstand these eventualities, the policy priorities are therefore to build resilience,” she said. (Starbiz)

Bank Negara is projecting foreign currency inflows amounting to RM12.88bn or US$4.12bn in the next 12 months due to interest income and the drawdown of project loans. The central bank said in a statement that in the next 12 months, the predetermined short-term outflows of foreign currency loans would amount to RM1.07bn arising from scheduled repayments of external borrowings by the government. Data showed that only contingent short-term net drain on foreign currency assets are the government’s guarantees of foreign debt due within one year, amounting to RM351.2m. The central bank said that long forward positions amounted to RM21.4bn as at end-Jul 2012. There are no foreign currency loans with embedded options, no undrawn, unconditional credit lines provided by or to other central banks, international organizations, banks and other financial institutions. Bank Negara also does not engage in foreign currency options vis-à-vis ringgit, it said. (Starbiz)

Producer price index (PPI) declined by 0.2% yoy in Jul (-0.9% in Jun), dragged down by the decrease in the PPI for local production (-0.5% vs. -1.5% in Jun). The import price index, however, rose 0.8% in Jul (0.8% in Jun). (Starbiz, Department of Statistics)

Malaysia’s external sector, unlike its regional peers, has been showing resilience and it is forecast to grow 1.4% in US dollar terms this year. The projection by the FocusEconomics Consensus Forecast panelists, published in the latest edition of FocusEconomics' macro economic forecasts for Asia, also expects Malaysia's trade surplus to narrow slightly to US$39bn (RM153bn) from US$39.9bn in 2011. For 2013, the panel expects exports to grow 9.8% while the trade surplus will rise to US$42.1bn. As for the country's GDP, the Consensus Forecast panelists maintain their forecast of a 4.3% growth this year, while for 2013, they see GDP growing by 5%. Consensus Forecast panelists project industrial production to grow 3.1% this year while for next year, they expect industrial output to expand 4.6%. It expects inflation to average 2.3% this year and 2.8% in 2013. On the Overnight Policy Rate (OPR), the Consensus Forecast panelists expect the OPR to reach 2.98% by year-end and 3.13% in 2013. (BT)

Federal Reserve Chairman Ben Bernanke, in his remarks at Jackson Hole, defended the effectiveness of unconventional monetary policies such as bond purchases and signaled he would soon deploy them again to attack unemployment. (Bloomberg)

The world's big central banks ought to cooperate more by taking into account the global impact of their individual policy decisions, Bank for International Settlements general manager Jaime Caruana said, but he was immediately challenged by Federal Reserve Chairman Ben Bernanke, who noted that a discussion about international monetary policy cooperation also implied cooperation on foreign exchange rates. (Reuters)

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 123.6 in the week ended 24 Aug from 123.3 the prior week. (Reuters)

US farm exports will set a sales record in the new marketing year due to high commodity prices that will magnify the value of dramatically smaller harvests amid the worst drought in half a century, the Agriculture Department said. (Reuters)

US crude oil imports fell in Jun, dropping 134,000 barrels per day from a year earlier to average at 9.101m barrels per day, the fourth consecutive monthly decline, the Energy Information Administration said. (Reuters)

China's manufacturing activity slumped in Aug to a nine-month low of, as the government's purchasing managers' index (PMI) fell to 49.2 from 50.1 in Jul. The August reading was the lowest since 49.0 in Nov last year, and below the median forecast of 50.0. (CNA)

China Premier Wen Jiabao said it was too early to loosen curbs on speculative property investment. Wen said government efforts to rein in runaway housing prices had been largely successful, but the controls over the real estate market are still in a critical period. (CNA)

Taiwan and China on Friday signed a deal paving the way for Taiwanese banks to take Chinese yuan deposits and make yuan loans. The memorandum of understanding outlines the new arrangement, known as direct yuan clearing, which is expected to come into force in 60 days. (CNA)

China called on the World Trade Organisation (WTO) to mediate in a US$7.3bn trade dispute with the United States over 22 types of products. (CNA)

Japan’s overall household spending rose 1.7% yoy in Jul (1.6% in Jun), helped by government support for buyers of fuel-efficient cars. This exceeded the median market forecast for a 1.2% increase. (Reuters)

Japan’s housing starts fell 9.6% yoy in Jul (-0.2% in Jun), the second fall in a row. Economists expected a fall of 10.3%. (Bloomberg)

Japan’s industrial production contracted a seasonally adjusted 1.2% mom in Jul (+0.4% in Jun) in a preliminary reading. That was well shy of forecasts for an increase of 1.7%. On a yearly basis, production was down 1.0%, again missing expectations for a gain of 1.8% after dropping 1.5% in the previous month. (RTTNews)

Japan's jobless rate remained steady in Jul at 4.3%, unchanged from Jun and in line with economists’ median forecast, and the availability of jobs improved to 0.83 (0.82 in Jun), matching forecasts and is partly helped by reconstruction demand continuing to underpin the jobs market. (Reuters)

Organisation for Economic Cooperation and Development chief Angel Gurria urged yesterday the European Central Bank to give a credible signal to markets and resume bond-buying to help debt-wracked Italy and Spain as soon as possible. (AFP)

Eurozone’s annual rate of consumer price inflation accelerated to 2.6% in Aug from 2.4% in Jul, Eurostat reported in a preliminary estimate. Economists had forecast a rise to 2.5%. The unemployment rate stood at 11.3% in Jul, unchanged from an upwardly revised reading in Jun and in line with forecasts. (WSJ)

Portugal will pursue a rescue package designed to drag the country out of its debt crisis with “determination and audacity,” Prime Minister Pedro Passos Coelho affirmed. (AFP)

Iraq's oil exports reached their highest level in more than three decades last month as the country's output has continued to increase. (AFP)

Sixteen nations home to roughly half the world's population have agreed "in principle" to create a free trade area spanning Asia, the secretary-general of ASEAN said on Friday. Trade ministers from ASEAN and their counterparts from China, Japan, South Korea, India, Australia and New Zealand will press their leaders to start talks on the trade zone at a regional summit in Nov. (CNA)

India's economy expanded at a slightly faster pace of 5.5% yoy in April-June (5.3% in 1Q12). This topped the 5.2% expansion expected by the market. However, investment has slowed sharply as another sign of malaise and stepped up pressure on the government to push through new policies to spur growth. (AWSJ)

A panel set up by India’s prime minister recommended deferring a proposal to crack down on tax avoidance by three years to the assessment year 2017-18 on “administrative grounds,” a move investors said may help boost capital inflows amid the threat of a rating downgrade to junk. (Bloomberg)

Thai exports in Jul fell 4.46% yoy to US$19.544bn. Imports totaled US$21.29bn, up by 13.73% yoy. The country had a trade deficit of US$1.746bn. The government’s exports growth forecast for 2012 is now expected at only 5-6% versus 12.8% earlier. (Bangkok Post)

Vietnam’s state budget revenues through mid-Aug totalled an estimated VND418.5tr, equal to about 56.5% of this year's target, somewhat behind the pace needed to meet the target at year's end, whilst spending totalled VND534tr, resulting in a deficit estimated at VND116tr. (Vietnam News)

Vietnam’s total retail revenue of goods and services in 8M12 surged 17.9% yoy to VND1,517tr, according to the General Statistics Office. (Vietnam News)

Vietnam is optimistic about rice exports totalling 2.82m tonnes in the remaining months of this year, for 2012 sales to hit over 7m tonnes. (Vietnam News)

The Philippine economy grew 5.9% yoy in 2Q12 (6.3% in 1Q12), ahead of expectations of a 5.5% increase. On a qoq basis, growth touched 0.2% (3% in 1Q12). (Bloomberg)

The index for hiring expectation of firms in the Philippines rose to +27.4% for 4Q12 (+23.2% in 4Q11), the highest index registered since the central bank started conducting the quarterly survey in 2006. (Philippine Daily Inquirer)

Indonesia’s government said capital spending by the end of the year will be about 90% of the budget. The slow absorption of capex of only 30% as of 23 Aug 2012 of the ceiling set in the 2012 State Budget and Expenditure Amendment (APBN-P) amounting to Rp168.7tr is due to the lack of billing for ministries/institutions’ project implementations. (IFT)

Bank Indonesia governor Darmin Nasution said that the country needed to allow the rupiah to weaken against the dollar to allow the country’s exports to become more competitive. (Jakarta Globe)

General Election: Najib hints at November polls. Datuk Seri Najib Tun Razak has strengthened speculation that the next general election will be held in November. With the Prime Minister scheduled to unveil the National Education Blueprint on Sept 11 and Budget 2013 on Sept 28, talk in political circles is that the general election will likely be held in the second last month of the year. The Barisan Nasional chairman's one-on-one meetings with component party heads on Aug 28 to discuss their candidates' list have also given credence to talk that the polls will be held then. In his strongest hint yet, the Umno president brought his favourite number 11 into prominence during the joint opening of the party's Kinabatangan, Sandakan, Batu Sapi, Beluran and Libaran delegates meeting here.( Source: TheStar)

Property: MRCB debt gloom resolved with takeover of EDL. The governments takeover of the Eastern Dispersal Link (EDL) will enlighten the Malaysian Resources Corp Bhds debt by about MYR1b and bolster its coffers significantly. According to an executive at a highway company, the compensation for MRCB would have been spelled out in the concession agreement. (Source: The EdgeDaily)

AmBank: AmBank, RSGC launch new credit card. AmBank (M) Bhd has joined hands with The Royal Selangor Golf Club (RSGC) to launch a new co-brand credit card for its members who comprise industry leaders, high-ranking government officials and foreign diplomats.Dubbed the AmBank RSGC World MasterCard, it is designed to provide club members with privileges in golf, travel, dining, shopping rewards and priority banking services, among others. AmBank is the official bank for RSGC. (Source: The Sun)

Sime Darby. is planning its first multi-currency Islamic bond program of as much as US$1.5bn in Malaysia to raise funds for capital expenditure. “We are having ongoing discussions with bankers,” Tong Poh Keow, the group chief financial officer, said in an interview. “The first issuance will likely be in dollars.” (Bloomberg)

The government is on track to achieve a 50:50 ratio of biomass to palm oil production in the country's palm oil industry by 2020, said Plantation Industries and Commodities Deputy Minister Datuk Hamzah Zainudin. He said the current ratio is 10:90 with the target to achieve the 50:50 ratio for the industry. "The Malaysian Palm Oil Board (MPOB) is currently focusing on biomass by turning waste into wealth," he added. (Bernama)

Gadang Holdings Bhd is bidding for construction jobs worth more than RM2bn, mostly government projects, to grow its future earnings. Its MD Tan Sri Kok Onn said although the construction sector is facing a high cost of building materials and labour shortage, Gadang is eyeing more jobs to replenish its current order book and move up a notch.Gadang has RM1.5bn worth of jobs in hand to keep it busy for the next three to four years, said Kok. This includes the RM863m contract for the My Rapid Transit (MRT) project and a RM410m job to build the 300-bed Shah Alam Hospital. Gadang also has an oil palm plantation in Ranau, Sabah, where it has teamed up with oil palm plantation owners for the cultivation of some 6,000ha of oil palm over two phases. The group wants its plantation business to make up 10% of its revenue and net profit by 2015. (BT)

UOA Development says its combined new property sales for 2012 and 2013 may surpass the RM4bn mark, helped by substantial real estate launches during the two-year period. The group is targeting RM3.5bn worth of sales from the second half of this year to end-2013. For 2012 and 2013, the developer said its pipeline of launches within the Klang Valley have a combined valued of RM3.45bn. (Financial Daily)

Fitch Ratings views Tenaga Nasional Bhd's outlook as stable indicating that the utility company will be able to maintain a financial profile appropriate for its ratings on expected improvements to cheap natural gas availability from 2013 onwards. Fitch said Tenaga should be able to maintain its current ratings in the next 2-3 years even if it were to source LNG at market prices without a subsidy provided increases in generation volumes are a moderate 4% annually and Petronas would increase natural gas supply to 1,100 mmscfd from FY13 onwards. (Fitch, BT)

Green Packet is eyeing the mobile voice market next year. The company plans to upgrade its network from 4G to long-term evolution (LTE). In the immediate-term, the group is focused on seizing opportunities like the dual mode Wimax/LTE devices niche market. It is also working on delivering networking solutions to cable operators in the US and converged operators in Europe and China. (Malaysian Reserve)

Nestle is expecting 2H12 to be more challenging as uncertainties in the global economic grows, driving volatility in commodity costs. To overcome the challenges, the group said it will continue to capitalise on product innovation and renovation while promoting nutritionally balanced diets and healthy lifestyles. (Malaysian Reserve)

George Kent has selected the Thales Group to provide its internationally-renowned SelTrac communications-based train control system for the existing 27km Ampang LRT line. It would also serve the 18km south-west extension. The company said the project is scheduled for completion in 2015. (Bernama)

Zurich Insurance chief keen on Malaysian expansion
Martin Senn, CEO of Switzerland-based Zurich Insurance Group Ltd, has the enormous task of navigating the composite insurer in a sea of economic and market volatility. As still weak advanced economies such as the US and Europe offer slower growth prospects for Zurich Insurance, Senn is now steering his ship to emerging markets to capitalise on under-tapped regions which will help sustain the company's earnings. (Financial Daily)

Affin gets support from HK shareholders for stake acquisition
Affin Holdings Bhd has garnered the support of its Hong Kong-based shareholder Bank of East Asia Ltd (BEA) for the possible acquisition of a stake in Bank Muamalat Malaysia Bhd, banking sources said. The Hong Kong Stock Exchange-listed BEA, in which tycoon Tan Sri Quek Leng Chan owns 15.09% through Guoco Group Ltd, holds a 23.52% block in Affin. While discussions were still preliminary, the source said that Affin was looking to strengthen its niche in Islamic banking via an interest in Bank Muamalat, one of the country's two standalone Islamic banks. (StarBizWeek)

Petronas unit greases expansion plans
The lubricant division of Petronas Dagangan Bhd (PDB)) is looking at expanding its business in other sectors aside from the traditional automotive, namely in industrial, marine, power generation and plantations. PDB lubricant business division general manager Mohd Shobri A. Bakar said although Malaysia is considered a matured market for lubricants, there are still business opportunities for industry players to explore further. (BT)

Abu Dhabi launches USD7bn port
Abu Dhabi launched operations at a multi-billion dollar port facility last Saturday, seeking to diversify its oil-based economy with a project that could intensify competition for the region's shipping traffic with neighbouring emirate Dubai. Abu Dhabi Ports Co said Khalifa Port, built on a man-made island in the Taweelah area, and its adjacent Khalifa Industrial Zone, would together be two-thirds the size of Singapore when fully built. (BT)

Kelington Group upbeat on growth in high tech industries
Kelington Group Bhd is optimistic over its long-term prospects on the back of growth and advancements in the high technology industries after securing a recent batch of orders worth RM43.4m. Its chief operating officer Ong Weng Leong said Kelington's expertise in ultra-high purity (UHP) gas and chemical delivery solutions is well-suited for emerging sectors with huge untapped potential like solar energy, light-emitting diode-related products, bioscience, wafer fabrication and pharmaceutical. (Malaysian Reserve)

Ingens buy to support Ninetology Marketing growth ambitions
Ninetology Marketing SB's offer to take private ACE market-listed Ingenuity Solutions Bhd at RM0.55 sen a share is primarily to support the former's regional expansion ambitions for the mobile devices market. Ninetology chief executive officer and managing director Sean Ng said Ingens' existing businesses like software distribution, distribution of information and communication technology (ICT) products, system integrations and after-sales support services would provide his company the ability to scale-up its execution capability and growth potential. (Malaysian Reserve)

Asian Stocks Head for Month Low on Signs of Slower Growth (Bloomberg)
Asian stocks fell, with the regional benchmark index headed for the lowest close in a month, as economic reports from New Zealand to South Korea, Japan and China stoked concern that the region’s economy is slowing. Machinery maker Komatsu Ltd. (6301), which generates at least 10 percent of its sales out of China, fell 1.8 percent in Tokyo after a gauge of China’s manufacturing unexpectedly contracted. Sharp Corp. dropped 7.1 percent in Tokyo after the Nikkei newspaper reported the Japanese television maker cut the price of a stake it’s selling to Taiwan’s Foxconn Technology Group. BHP Billiton Ltd., the world’s largest mining company fell 0.4 percent in Sydney. The MSCI Asia Pacific Index slid 0.4 percent to 117.33 as of 10:22 a.m in Tokyo. It’s poised for the lowest close since Aug. 3. U.S. Federal Reserve Chairman Ben S. Bernanke said on Aug. 31 that further monetary easing is an option if progress remains slow on alleviating unemployment in the world’s largest economy.
“This gradual slowdown continues to play out, and again we are not expecting any change to the current Chinese policy in terms of what’s going on with the Chinese economy,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. that manages about $1 billion. “It’s going to be difficult for the market to keep rallying on the promise of QE and other measures without some improvement in the data,” he said, referring to Fed’s asset purchases, known as quantitative easing.

Japanese Stocks Decline on Capital Spending, China PMI (Bloomberg)
Japanese stocks fell for a third day after the nation’s capital spending rose less than expected and China’s manufacturing contracted for the first time in nine months, overweighing stimulus optimism after Federal Reserve Chairman Ben S. Bernanke signaled further bond purchases. Komatsu Ltd. (6301), a manufacturer of construction machinery that gets 14 percent of its sales from China, fell 1.8 percent. Sharp Corp. sank 6.1 percent after the Nikkei newspaper reported the television maker offered to cut the price of shares it’s selling to Taiwan’s Foxconn Technology Group. Uniden Corp. (6815), a communications-equipment maker that gets about 60 percent of its revenue in North America, climbed 1.2 percent. The Nikkei 225 Stock Average (NKY) fell 0.4 percent to 8,806.72 as of 9:46 a.m. in Tokyo, with volume almost 10 percent above the 30-day average. The broader Topix (TPX) Index slid 0.4 percent to 729.04 after rising as much as 0.2 percent earlier. About four shares dropped for every three that gained.
Bernanke’s remarks on Aug. 31 fueled “confidence the Fed will take action if macroeconomic data such as employment figures deteriorate,” said Hideyuki Ishiguro, assistant manager of investment strategy at Okasan Securities Co. in Tokyo. “China’s manufacturing is deteriorating day by day as inventories of steel and chemicals climb amid stalled demand.” The Topix was 16 percent below this year’s peak on March 27 on concern expansion in economies from China to the U.S. is slowing and Europe’s debt crisis deepening. Stocks on Topix were valued at 0.9 times book value, compared with 2.2 for the Standard & Poor’s 500 Index (SPXL1) and 1.5 for the Europe Stoxx 600 Index. A number less than one means companies can be bought for less than the value of their assets.

U.S. Stocks Fall for 2nd Week as Economy Overshadows Fed (Bloomberg)
U.S. stocks fell for the second straight week as evidence of a slowing global economic recovery overshadowed speculation that the Federal Reserve may introduce new stimulus measures. The Standard & Poor’s 500 Index rallied on the final day after Fed Chairman Ben S. Bernanke said more bond purchases are an option to lower the jobless rate. Hewlett-Packard Co. (HPQ) led declines among the biggest U.S. corporations with a 4 percent drop. Sears Holdings Corp. (SHLD) fell 6.7 percent after losing its place in the S&P 500. Hudson City Bancorp jumped 12 percent after M&T Bank Corp. (MTB) agreed to acquire the company. The benchmark gauge for American equities erased 0.3 percent to 1,406.58 after slipping 0.5 percent the previous week. The Dow Jones Industrial Average (INDU) lost 67.13 points, or 0.5 percent, to 13,090.84 in the latest week.
“People began questioning whether the market has gotten a little ahead of itself,” John De Clue, the Minneapolis-based global investment strategist at U.S. Bank Wealth Management, which oversees $104 billion, said in a telephone interview. “Europe continues to weaken. In the U.S., we got excited about gross domestic product being revised to 1.7 percent but, boy, that’s still a low number.” Equities slid earlier in the week as data showed economic confidence in the euro area and retail sales in Japan fell more than estimated. The U.S. economy climbed at a 1.7 percent annual rate from April through June, up from an initial estimate of 1.5 percent. Separate data showed more Americans than forecast filed for unemployment benefits, a sign that progress in the labor market is faltering.

U.S. Stocks Confound Bears Seeing Summer Drop (Bloomberg)
The August rally in stocks confounded bears who predicted the Standard & Poor’s 500 Index would repeat last year’s summer slump. As the CHART OF THE DAY illustrates, the S&P 500 tracked its 2011 performance in the first seven months of the year. The relationship broke down at the end of July as European Central Bank President Mario Draghi pledged to do whatever it takes to preserve the euro and speculation grew that Federal Reserve Chairman Ben S. Bernanke will herald further bond purchases at his speech in Jackson Hole, Wyoming, today. Albert Edwards, a London-based strategist at Societe Generale SA, used a version of this chart in a July 25 report that asked “is the S&P replaying 2011?” and said the U.S. economy looks to have returned to recession. The same day, Bob Janjuah, global head of tactical asset allocation at Nomura Holdings Inc., predicted a “major risk-off phase” in the coming four months with global stocks falling by as much as 20 percent to 25 percent.
“If it hadn’t been for Draghi’s ‘We will do everything’ remark, the S&P 500 would’ve followed the 2011 script,” said Manish Singh, the London-based head of investment at Crossbridge Capital, which has more than $2 billion under management. “The ECB has played the main role in making this year different.” The S&P 500 sank 5.7 percent in August 2011, and a further 7.2 percent the following month, data compiled by Bloomberg show. The benchmark gauge for U.S. equities advanced 2.3 percent this month though the Aug. 29 close. “We expected returns to be quite decent in August and still do going forward,” said Daniel McCormack, a strategist at Macquarie Securities Ltd. in London. “If you look at the background coming into the month, valuations were extreme and when that is the case you don’t need much in the way of good news to get markets moving.”

U.K. Stocks Are Little Changed on Bernanke Speech (Bloomberg)
U.K. stocks were little changed, following a three-day slide for the benchmark FTSE 100 Index, as Federal Reserve Chairman Ben S. Bernanke said he does not rule out further bond buying by the central bank. Xstrata Plc (XTA) and Glencore International Plc (GLEN) contributed the most to a rally by a gauge of U.K. mining stocks. Lavendon Group Plc (LVD) surged 5.8 percent after the maker of aerial work platforms doubled its dividend. Redrow Plc (RDW) gained 2.7 percent after a group led by its chairman made a takeover approach. The FTSE 100 Index declined 0.1 percent to 5,711.48 at the close in London, after earlier falling as much as 0.2 percent and rallying as much as 0.8 percent. The equity benchmark dropped 1.1 percent this week, paring its gain in August to 1.4 percent. The broader FTSE All-Share Index was little changed today, while Ireland’s ISEQ Index advanced 1 percent.
“Bernanke repeated what was expected: the Fed remains committed to the economy and -- if it needs support -- they will provide the necessary accommodation,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London. “Markets will have to wait until the next FOMC meeting to see how the cards fall,” he said, referring to the Federal Open Market Committee meeting next month. Bernanke said the unemployment rate in the world’s largest economy has seen no improvement since January. He leads an FOMC meeting on Sept. 12-13 to decide whether to further stimulate the economy in an attempt to encourage hiring.

Dollar Falls 3rd Day Versus Yen on Fed Stimulus Prospects (Bloomberg)
The dollar slid for a third day against the yen before U.S. data this week forecast to show manufacturing activity and hiring remained weak, adding to the case for further monetary easing by the Federal Reserve. The Dollar Index traded near a three-month low after Fed Chairman Ben S. Bernanke said at an annual forum in Jackson Hole, Wyoming that joblessness was a “grave concern” and that further bond purchases under quantitative easing shouldn’t be ruled out. Labor Department data on Sept. 7 may show the U.S. added fewer jobs in August. Australia’s dollar slid while the yen climbed amid signs of slowing growth in China. “Weak U.S. data will now be seen as raising the chance of QE, which is U.S. dollar negative,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington, referring to asset purchases known as quantitative easing. “Non-farm payrolls is certainly the most important event for this week.”
The dollar slid 0.2 percent to 78.23 yen as of 10:12 a.m. in Tokyo from the close on Aug. 31, when it touched 78.19, the lowest since Aug. 13. The Dollar Index (DXY), which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trade partners, was at 81.264 from the 81.208 close last week, when it reached 80.964, the lowest level since May 22. U.S. markets are closed today for a holiday. The Australian dollar dropped 0.5 percent to $1.0266 and lost 0.7 percent to 80.33 yen. Japan’s currency gained against all its 16 major peers, rising 0.2 percent to 98.34 per euro.

Hiring Probably Limited by Cooling Demand: U.S. Economy Preview (Bloomberg)
Payrolls probably grew at a slower pace in August and unemployment exceeded 8 percent for a 43rd month, highlighting why Ben S. Bernanke said the lack of jobs is a “grave concern” for U.S. policy makers, economists said before a report this week. The employment tally of 125,000 would follow a 163,000 gain in July, according to the median forecast of 71 economists surveyed by Bloomberg ahead of Labor Department figures Sept. 7. The jobless rate likely held at 8.3 percent. A separate report may show manufacturing teetered between growing and shrinking. “Payroll growth is pretty lackluster,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “It’s going to be hard to bring down the unemployment rate quickly. Demand is soggy and on top of that we have weakening exports and fiscal policy uncertainty.”
The stagnant labor market is one reason why more action on the monetary policy front remains an option, Federal Reserve Chairman Bernanke said last week. A cycle of below-average gains in employment and consumer spending is now being reinforced by a global slowdown and concern over the so-called U.S. fiscal cliff, making a rebound more daunting to achieve. The unemployment rate has exceeded 8 percent since February 2009, the longest stretch in monthly records going back to 1948. Payroll gains slowed from an average 226,000 in the first quarter to 73,000 in the April to June period, before picking up in July. Including the July advance, it has taken the U.S. three years to recover about half, or 4 million, of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.

Bernanke Defends Bond Purchases in Signal of More Fed Easing (Bloomberg)
Federal Reserve Chairman Ben S. Bernanke, with a little more than a year left in his second term, defended the effectiveness of unconventional monetary policies such as bond purchases and signaled he would soon deploy them again to attack unemployment. Bernanke’s remarks yesterday to central bankers and economists gathered in Jackson Hole, Wyoming, described the benefits of his signature activism and innovation. They served as a rejoinder to critics outside and inside the Fed, including Richmond Fed President Jeffrey Lacker, who maintain that the returns on his ultra-easy monetary policy are diminishing and may even pose threats such as higher long-term inflation. The 58-year-old Great Depression scholar, whose term ends in January 2014, left little doubt about his own views on the cost-benefit debate, saying the disadvantages “appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant.”
Stocks and Treasuries climbed yesterday and the dollar weakened to a more than three-month low as investors speculated steps to boost the economy may come as soon as this month. “The one point he made is that these tools work,” said Mark Spindel, founding partner of hedge fund Potomac River Capital in Washington and the former chief investment officer for $15 billion of assets at the International Finance Corp., a member of the World Bank Group. “Given where the economy is, his message was: I am damn well charged with using them.”

China Deterioration Raises Risk of Wen Missing Target: Economy (Bloomberg)
China’s economy is showing mounting signs of deterioration from manufacturers to banks, raising the risk that outgoing Premier Wen Jiabao will miss his growth target for the first time since taking office in 2003. Manufacturing unexpectedly shrank for the first time in nine months in August, a government survey showed Sept. 1. The reading added to evidence of weakness after a surfeit of unsold goods left near-record rubber stocks at China’s main hub for the commodity and financial strains saw a 27 percent jump in overdue loans at the five biggest banks in the first half. China hasn’t failed to exceed the Communist Party’s annual growth target since the throes of the Asian financial crisis in 1998, and a miss of this year’s 7.5 percent goal may complicate a once-a-decade leadership handover. The outgoing generation of policy makers has held back on stimulus this year as it seeks to rein in a property-market boom and avoid a jump in bad debt.
“If there is no further policy response, it’s very likely that GDP growth will fall below the target and this administration will likely hand over a hard-landing economy to the next one,” said Liu Li-Gang, chief China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. The central bank should “revert to cutting banks’ reserve requirements more aggressively to revitalize the economy. If we have a cut soon we could have good fourth-quarter growth.”

China Manufacturing Unexpectedly Contracts as Orders Drop (Bloomberg)
China’s manufacturing unexpectedly shrank for the first time in nine months as new orders contracted and output rose at a slower pace, signaling the slowdown in the world’s second-biggest economy is deepening. The Purchasing Managers Index fell to 49.2 in August from 50.1 in July, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. Australia & New Zealand Banking Group Ltd. cut its estimate for China’s full-year growth after the report. The data increase pressure on Premier Wen Jiabao to reverse the slowdown ahead of the transfer of power to a new Communist Party leadership that begins later this year. Record unemployment in the euro area and a jobless rate stuck at more than 8 percent in the U.S. may crimp an export rebound while slumping corporate earnings, bad debts at banks and property curbs are restraining investment in China.
“The government won’t want to hand over an economy in a hard landing to the next administration, so authorities are likely to become bolder with policy easing, said Liu Li-Gang, chief China economist at ANZ in Hong Kong. “They could continue to use tax relief and faster approval of infrastructure investment to instill confidence, but the most effective policy tool in the short term is to aggressively ease the reserve- requirement ratio.”

Hong Kong Recession Risk May Increase on Exports, Tsang Says (Bloomberg)
Hong Kong’s risk of a “technical recession” may increase after declines in exports and a slowdown in retail sales, Financial Secretary John Tsang said. “We are unable to escape the impact of the European debt crisis,” Tsang wrote on his blog yesterday in Chinese. He didn’t give a forecast for third-quarter gross domestic product. Hong Kong’s economy shrank 0.1 percent in the second quarter from the previous three months as the sovereign debt crisis in Europe capped export demand. China’s slowdown is dragging on trade, weighing on confidence and encouraging the million of mainlanders who visit each month to spend less on luxury goods. The benchmark Hang Seng Index (HSI) is down about 10 percent from this year’s high in February. Retail sales grew in July at the slowest pace since the global financial crisis. Exports fell 3.5 percent from a year earlier.
A shrinking economy would add to challenges for Chief Executive Leung Chun-ying, who took office July 1 and faces public concern over housing costs, the gap between rich and poor and the mainland government’s role in education. Thousands of residents demonstrated on Sept. 1 to protest a planned education program they say will be Communist Party propaganda. Retail figures are “worrying” and it will be difficult for exports to return to growth in the short term, Tsang said, adding that the city also faces a risk of rising unemployment. Donna Kwok, an economist at HSBC Holdings Plc in Hong Kong, said Aug. 30 that visitors from China are paring spending on luxury goods and consumer confidence has weakened, “weighed down by continued turbulence in global financial markets.”

South Korea’s Consumer Prices Rise 1.2% From Year Earlier (Bloomberg)
South Korea’s inflation slowed to the weakest pace in 12 years in August, according to a report released 10 days before the central bank reviews interest rates. Consumer prices increased 1.2 percent from a year earlier after a 1.5 percent gain in July, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 12 economists was for a 1.4 percent gain. Prices rose 0.4 percent from July. Europe’s debt crisis and austerity measures are weighing on exports and confidence across Asia, weakening production and growth in countries from Japan to China to South Korea. The Bank of Korea held rates steady last month after an unexpected reduction in July. Weak inflation gives more room for another cut in the benchmark. “A rate cut is likely in September to support growth,” Lee Min Koo, a Seoul-based economist at Eugene Investment & Securities Co. said before today’s data.
Core consumer prices, which exclude oil and agricultural products, advanced 1.3 percent in August from a year earlier. The Bank of Korea cut its forecast for the nation’s growth this year to 3 percent from 3.5 percent on July 13 and is likely to make a further reduction in October, according to Lee Sung Kwon, a Seoul-based economist at Shinhan Investment Corp. Signs the economy is cooling include an Aug. 29 report that the current-account surplus climbed to a record in July because of declining imports. An index measuring manufacturers’ confidence for September was at 75 from 70 the previous month, the only readings below 80 since 2009.

Japan May Add Mortgage Tax Benefits to Cushion Slow Sales (Bloomberg)
Japan may extend mortgage tax benefits by five years and raise the deduction rate to cushion an expected slowdown in home sales in 2014 when a consumption tax increase takes effect. The finance and land ministries are in talks on a plan that would save the average home buyer as much as 10 million yen ($128,000) in 2014, compared with 3 million yen this year, the Nikkei newspaper said Sept. 1 without citing the source of the information. Details will be decided later this year, it said. Home sales may slow, retarding economic growth, when the sales tax jumps to 8 percent from 5 percent, Nikkei said. Property and fund association groups are seeking a tax reduction for home buyers to counter any slowing of the housing market. “This is better than doing nothing,” Masaaki Kanno, chief economist at JPMorgan Securities Japan Co., said yesterday in a telephone interview. “Numbers show the economic outlook started deteriorating already, and this is doing little more than to patch over the problem temporarily.”
The plan will call for extending to 15 years from 10 the tax benefit for new home buyers starting in 2014 and raising the deduction to as much as 2 percent of the outstanding mortgage balance from 1 percent, Nikkei said. The government will consider further benefits from 2015 when the sales tax jumps to 10 percent, it said. Prime Minister Yoshihiko Noda in August won parliamentary approval for a boost in the sales tax to ease the government’s reliance on debt to cover the rising costs of care for Japan’s aging population.

Japan Capital Spending Rises Less-Than-Forecast 6.6% on Year (Bloomberg)
Japanese companies’ capital spending rose in the second quarter from a year earlier, boosted by the comparison with the period immediately after the nation’s record earthquake and tsunami. Expenditure excluding software gained 6.6 percent, the Finance Ministry said today in Tokyo. The median estimate of six analysts surveyed by Bloomberg News was for an increase of 7.8 percent. A year earlier, spending declined 8.2 percent. Today’s report may lead the government to revise down an estimate that the economy grew an annualized 1.4 percent in April-through-June, already weaker than the 5.5 percent gain in the first quarter, RBS Securities Japan Ltd. said. Consumer prices slid in July and industrial output unexpectedly fell, underscoring the risk Japan’s recovery will peter out as Europe’s crisis and strength in the yen curb exports.
“Today’s capital spending figures look weaker than the business spending number in the preliminary GDP report,” said Yoshimasa Maruyama, chief economist at Itochu Corp. (8001) in Tokyo. “Companies have slowed their business spending and will likely continue to do so in the coming months.” The Nikkei 225 Stock Average fell 0.5 percent as of 10:15 a.m. in Tokyo. The yen gained 0.2 percent to 78.25 per dollar, up about 7 percent since mid-March. The central bank may expand its asset-purchase program at its next meeting on Sept. 18-19, according to RBS Securities Japan Ltd. in Tokyo.

India Signals ‘Natural Death’ to Tax Plan Amid Downgrade Threat (Bloomberg)
A panel set up by India’s prime minister recommended deferring a proposal to crack down on tax avoidance by three years, a move investors said may help boost capital inflows amid the threat of a rating downgrade to junk. The General Anti-Avoidance Rule, or GAAR, outlined by former finance minister Pranab Mukherjee in his March 16 budget spooked foreign investors and raised concerns that the crackdown with retrospective effect would indiscriminately apply to their holdings of stocks and bonds. A draft report released on Sept. 1 by the four-member committee, suggested delaying its implementation to the assessment year 2017-18 on “administrative grounds.” “It is definitely good news and a sentimental boost,” said Ananth Narayan G., managing director and co-head of wholesale banking at Standard Chartered Plc in Mumbai. “Essentially the proposal will be on hold for the next three years and hopefully will die a natural death, at least the retrospective clause.”
Global funds turned net sellers of Indian stocks in April and May after the proposals, pushing the rupee down to a record low as Prime Minister Manmohan Singh grappled with corruption allegations, a record current-account deficit, and missed budget targets. Singh set up the panel in July to help “reverse the climate of pessimism” after Standard & Poor’s and Fitch Ratings cut the sovereign credit outlook to negative, a step closer to non-investment grade rating. The tax panel led by Parthasarthi Shome, a former adviser to the finance minister, also suggested abolishing taxes on proceeds from the transfer of listed securities, whether they are from capital gains or business income, for both Indians and non-residents.

Australian Retail ‘Fragile’ as Global Risks Mount, Deloitte Says (Bloomberg)
Australia’s retail recovery is fragile because a weakening global outlook is counteracting lower borrowing costs, a Deloitte Access Economics report said. Inflation-adjusted retail sales growth is forecast to be 3.4 percent in the 12 months through June 30, moderating to 2.7 percent in 2013-14 as real wage growth slows, the Canberra-based research company said in a report released today. “While retail has recovered fast, the global and Australian economic backdrop suggests that the recovery is still a fragile one,” according to the Deloitte report. “Trend sales growth may be achieved over the next year, largely as interest rates remain low, but it is a stretch to see the retail sector perform any better than that.”
Fueled by A$2 billion ($2.1 billion) in government carbon- tax rebates and benefit checks paid out since May, as well as four central bank rate cuts since November, retail sales have risen in all but one month this year. JB Hi-Fi Ltd. (JBH), Australia’s second-largest electrical goods retailer, said last month that revenue will increase this year amid a “challenging” environment.

Draghi May See Silver Lining in Disappointing Investors (Bloomberg)
Mario Draghi might not be too worried about disappointing investors this week. As markets look for the European Central Bank president to unveil details of his bond-purchase program on Sept. 6, Italy and Spain are showing little willingness to request aid from Europe’s bailout fund -- a pre-condition for the ECB to start buying their debt. A jump in bond yields may remind governments that they need to act first. “The market is expecting a lot from the ECB,” Gustavo Reis, an economist at Bank of America Merrill Lynch, wrote in a note to clients. “However, we look for little clarification on the bond-buying program. The likely market disappointment should intensify the pressure on Spain.”
Draghi’s plan hinges on governments asking the bailout fund to buy their bonds on the primary market, which would require them to sign up to strict conditions, before the ECB intervenes on the secondary market. While Spanish Prime Minister Mariano Rajoy and Italian Premier Mario Monti are heaping pressure on the ECB to act to lower their borrowing costs, they’re resisting making an application to the bailout fund for aid. “Draghi’s announcement of intervention shows the robust will of the ECB to solve the problem,” Rajoy told Spain’s ABC, Germany’s Bild am Sonntag, France’s Le Journal du Dimanche and Italy’s Corriere della Sera in a joint interview published over the weekend. “I will await the results of the ECB and then make a decision that’s good for Spain and for the euro.”

U.K. Sticks to Deficit Plan as Coalition Eyes Quicker Investment (Bloomberg)
U.K. Prime Minister David Cameron said his government will continue with its deficit-reduction plans amid calls from opposition lawmakers for a rethink as the economy struggles to recover from a double-dip recession. “We’ve cut the deficit by a quarter already, and we are sticking to this course: rejecting the easy path; restoring sanity to our finances,” Cameron wrote in an opinion column published yesterday in the Mail on Sunday newspaper. “We’re on a hard road to balancing Britain’s books” and “you cannot borrow your way out of a debt crisis,” he said. With Britain struggling to climb out of its second slump in three years, calls for the government to do more to spur the economy have intensified as the largest budget reductions since World War II and the euro-area debt crisis hurt demand.
While stopping short of saying he will fund new infrastructure, Chancellor of the Exchequer George Osborne said yesterday that the government will announce proposals to guarantee investment finance and is overhauling planning laws to accelerate the approval of projects. Legislation will be put forward this week, he said. The plan is for the government to “use the low interest rates we’ve earned by being tough on the deficit to help underwrite construction projects, including housing,” Osborne said in a television interview on the BBC’s “Andrew Marr Show.” The government is doing “all these things to get the economy moving, to make sure that the jobs we’re already creating in this economy continue to be created,” he said.

Commodities Beating All Assets Again for First Time in 16 Months (Bloomberg)
Commodities beat equities, bonds and the dollar for a second consecutive month, the longest streak in more than a year, on mounting speculation policy makers will seek to rescue their economies. The Standard & Poor’s GSCI Total Return Index of 24 commodities rose 6.4 percent in August, led by silver, cocoa and heating oil. The MSCI All-Country World Index of equities gained 1.9 percent for a third straight advance, as the U.S. Dollar Index (DXY), a measure against six currencies, dropped 1.7 percent. Bonds of all types returned 0.2 percent on average, led by Europe’s most indebted nations, according to Bank of America Merrill Lynch’s Global Broad Market Index.
Gains in riskier assets show investors expect policy makers will succeed in bolstering growth. The Federal Reserve and European Central Bank are already holding borrowing costs at a record low, and more than two-dozen nations cut market interest rates this year. China has slowed for six quarters, the 17- nation euro area is contracting, and consumer confidence in the U.S. fell the most in 10 months in August. “The market has clearly already taken a very sanguine view,” said Bill O’Neill, the London-based chief investment officer for Europe, Middle East and Africa at Merrill Lynch Wealth Management, which oversees more than $1.8 trillion of assets. “The dollar has been weaker, and that’s one of the reasons why commodities are propelled higher. Part of it has been the easing expectations, and the conviction that the Fed would do something aggressive in early September.”

Crop Traders Extend Bull Run as Rain Comes Too Late: Commodities (Bloomberg)
Corn and soybean traders extended their longest bullish outlook in at least 11 months on speculation rain in the U.S. will come too late to revive crops after the worst drought in a half century. Seventeen analysts surveyed by Bloomberg said corn will climb next week. A further six were bearish and four were neutral. Twenty expect gains in soybeans, four saw a drop and four predicted little change. The 19th straight bullish outlook is the longest run for corn since September and for soybeans since June 2011. Hedge funds’ bets on a rally in corn are the most in 16 months and near the largest for soybeans since at least 2006, U.S. Commodity Futures Trading Commission data show.
The worst U.S. drought since 1956 and dry weather in Eastern Europe and Russia drove corn to a record $8.49 a bushel this month. Food prices tracked by the United Nations rose the most since 2009 in July. Rain in the Midwest may be too late to improve yields because farmers already started the corn harvest and soybeans are reaching maturity. Credit Suisse Group AG said Aug. 29 the rally will to continue for several more months. “The crop needed these rains a month ago,” said Christopher Gadd, an analyst at Macquarie Group Ltd. in London. “We expect to see prices of corn move closer to $9 a bushel. The situation for soybeans looks far more difficult because demand remains resilient at these levels.”

Crops Rally
Soybeans advanced 45 percent to $17.5275 on the Chicago Board of Trade this year and set a record yesterday. Corn gained 23 percent to $7.9725, reaching an all-time high Aug. 10. The Standard & Poor’s GSCI gauge of 24 commodities added 4.4 percent and the MSCI All-Country World Index (MXWD) of equities rose 7.5 percent. Treasuries returned 2.3 percent, a Bank of America Corp. index shows. Areas of central Illinois and Indiana had as much as 3 inches of rain in the past two weeks, twice the normal amount, National Weather Service data show. Some Midwest regions received less than half of normal rainfall in the past 90 days. Tropical Storm Isaac may bring more than 4 inches of rain to areas of Illinois, Missouri and Indiana in the next five days, with smaller amounts stretching from southeast Iowa to Ohio, according to the service.
Corn production will drop 13 percent to 10.779 billion bushels this year, the lowest since 2006, and the soybean crop may be 12 percent lower at 2.692 billion bushels, the U.S. Department of Agriculture said Aug. 10. The agency updates its forecasts Sept. 12.

China Sales
The USDA announced daily export sales of soybeans to China exceeding 100,000 metric tons twice in the past two weeks. In the six weeks through Aug. 23, U.S. exporters sold 3.719 million tons for delivery in the current and upcoming marketing years, 12 percent more than in the same period a year earlier, USDA data show. Corn sales totaled 1.877 million tons, 49 percent less than a year earlier. Costlier crops may curb demand from biofuel producers. U.S. ethanol output slid 11 percent since June 8 and in the week through July 20 reached the lowest level since the Energy Department began tracking weekly data in 2010. Producers are losing about 36 cents on each gallon of ethanol, based on fuel and corn contracts for September, data compiled by Bloomberg show. More U.S. corn went to ethanol refineries than into livestock feed in 2010-11 for the first time ever.

GRAINS: U.S. soybeans gave back all their gains from the previous session, when they touched a contract high, as traders took profits, with markets looking to a gathering of central bankers later in the day for clues on possible imminent monetary stimulus. Wheat was flat -- though it remains on course for its first weekly gain since the end of July -- ahead of a critical meeting of Russian ministers that is expected to herald curbs to grain exports. Corn fell as traders speculated damage from Hurricane Isaac would be less severe than feared, with new-crop corn on course to record its biggest weekly fall in 11 weeks. (Reuters)

DTN Closing Grain Comments 08/31 14:45 : Another Quiet Friday (CME)
Grains drifted lower during another sleepy session, though contracts were able to close well off session lows by the close. Soybeans led the way, closing near the new all-time high. Outside markets had a strong day as the dollar came under increased pressure tied to Ben Bernanke's comments.

Corn Market Recap for 8/31/2012 (CME)
December Corn finished down 8 3/4 at 799 3/4, 10 off the high and 6 1/2 up from the low. March Corn closed down 6 3/4 at 802. This was 6 3/4 up from the low and 7 3/4 off the high. December corn traded sharply lower into late in the day but managed to close back up near 800 after a low of 793 1/4 which was also Wednesday's low and the low for the week. Traders took profits ahead of the 3-day holiday weekend. The weaker trade was also linked to a sharply lower wheat market after Russian officials failed to announce any type of restriction on wheat exports in today's meetings. Technical selling and calendar spread pressure added to the negative tone. Tropical Storm Isaac is expected to dump 4-6 inches of rain in areas of Arkansas, Missouri, and Illinois over the next couple days. The heavy rain will not have a positive impact on corn conditions and will delay harvest for some areas. Corn basis was mixed today as some areas begin harvest, while others are delayed due to Hurricane Isaac.
Corn bids in the Gulf of Mexico held steady on today's move lower as exporters prepare to open back up for business next week. The US Dollar sank to a 3 month low today, but the move offered minimal support to price gains. November Rice finished down 0.025 at 15.285, 0.115 off the high and 0.065 up from the low.

Wheat Market Recap Report (CME)
December Wheat finished down 13 1/2 at 889 1/2, 16 1/2 off the high and 8 1/2 up from the low. March Wheat closed down 11 1/2 at 899 1/2. This was 9 up from the low and 13 1/4 off the high.
December Chicago wheat traded sharply lower late in the day but managed to bounce near 7 cents into the close with help from a recovery in the other grains and a positive tilt to outside markets. Kansas City and Minneapolis were lower as well. Wheat slipped lower early this morning after Russian officials offered no evidence that wheat export restrictions would be put in place. As a result, traders took profits after the sizeable gains this week. Chicago wheat led the grain market lower as it narrowed its premium to the corn market. Another private analyst cut their estimate for Russian wheat production today to 39-40 million tonnes vs. the current USDA estimate of 43 million tonnes. The cut in production offered no support to the market but traders continue to fear that the lower production levels could mean a dramatic slowdown in exports later this year. This could be supportive to wheat long term. The US Dollar fell to a fresh 3 month low but the weaker dollar did little to support grains as traders took profits ahead of the holiday weekend. December Oats closed up 2 1/4 at 397 1/2. This was 5 up from the low and 4 1/2 off the high.

Record U.S. farm export sales seen despite drought--USDA (Reuters)
U.S. farm exports will set a sales record in the new marketing year due to high commodity prices that will magnify the value of dramatically smaller harvests amid the worst drought in half a century, the government forecast on Friday.

U.S. physical coffee-Colombian dealers strive to attract buyers (Reuters)
U.S. coffee importers said on Thursday that dealers in Colombia expect their harvest to improve and have grown more aggressive in efforts to sell beans, while Brazil's fine-cup beans maintained their small premium over the benchmark futures contract.

Russia wheat crop forecast to be lowest in 9 years (Reuters)
Drought-stricken Russia will have less wheat to supply domestic and export markets this season than it did in the 2010/11 crop year, when the government shocked markets with a snap decision to ban exports, a leading Russian grain analyst said.

SOFTS: ICE cocoa touched a nine-month high in early trading due to concerns that adverse weather in West Africa could damage crops, while sugar hovered above 11-week lows, with harvesting in Brazil capping gains. ICE arabica coffee firmed, underpinned by a soft dollar, with upside potential limited by abundant supplies. (Reuters)

Oil Declines From Two-Week High as China Manufacturing Contracts (Bloomberg)
Oil dropped from the highest closing price in almost two weeks as manufacturing unexpectedly contracted in China and crude production resumed in the Gulf of Mexico after Hurricane Isaac. Futures slipped as much as 0.5 percent in New York after capping the biggest monthly gain since October on Aug. 31. Manufacturing in China, the world’s second-biggest oil user, shrank for the first time in nine months in August as orders declined, a government survey showed Sept. 1. About 72 percent of daily crude output in the Gulf of Mexico is shut after Isaac, down from as much as 95 percent last week, data from the U.S. Bureau of Safety and Environmental Enforcement showed. Oil for October delivery slid as much as 46 cents to $96.01 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.17 at 11:18 a.m. Sydney time. The contract rose 2 percent on Aug. 31 to $96.47, the highest level since Aug. 22. Prices climbed 9.6 percent in August for a second monthly gain and are down 2.7 percent this year. Brent oil for October settlement decreased 5 cents to $114.52 a barrel on the London-based ICE Futures Europe exchange. Prices advanced 9.2 percent last month. The European benchmark grade’s premium to West Texas Intermediate was at $18.35, compared with $18.10 on Aug. 31. China’s Purchasing Managers Index fell to 49.2 from 50.1 in July, the National Bureau of Statistics and China Federation of Logistics and Purchasing said Sept. 1. The figure was below the estimates of 24 of the 25 analysts in a Bloomberg survey. The dividing line between expansion and contraction is 50. Oil and natural-gas production in the Gulf of Mexico from undamaged platforms will resume immediately after checks have been completed, the BSEE said on its website. The equivalent of about 986,698 barrels a day of oil and 56 percent of daily gas output was offline as of 12:30 p.m. New York time yesterday, it said.

Gold Wagers Jump to 5-Month High as Fed Spurs Rally: Commodities (Bloomberg)
Speculators increased bets on rising gold prices to the highest since March as mounting speculation that the Federal Reserve will expand its record stimulus drove bullion to its second-biggest monthly gain this year. Money managers raised their net-long positions by 19 percent to 131,687 futures and options contracts in the week to Aug. 28, U.S. Commodity Futures Trading Commission data show. Combined bets across 18 U.S. commodities fell 1.9 percent to 1.3 million contracts, still near the highest in 15 months. The Standard & Poor’s GSCI Spot Index of 24 commodities gained for a fifth straight week, the longest rally since June 2011.
Investors accumulated a record hoard of gold in exchange- traded products last week, exceeded only by the U.S. and Germany when compared with national reserves. U.S. sales of bullion coins jumped 28 percent in August. Fed Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.” The metal rose 70 percent as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. “Anytime they’re putting more money into the economy, it’s good news for gold,” said Dan Denbow, a fund manager at the $1.8 billion USAA Precious Metals & Minerals Fund in San Antonio. The outlook for monetary stimulus “allows the risk-on trade to come back in to the market.” (Bloomberg)

ITS CPO export up 17.7% to 1,453,544 tonnes for the period of 1~31 Aug 2012.

Soybean Complex Market Recap (CME)
November Soybeans finished down 7 at 1756 1/2, 6 3/4 off the high and 11 up from the low. January Soybeans closed down 6 1/2 at 1751. This was 12 up from the low and 6 off the high. December Soymeal closed down 1.9 at 533.4. This was 3.5 up from the low and 2.7 off the high. December Soybean Oil finished down 0.17 at 57.08, 0.46 off the high and 0.32 up from the low.
November soybeans traded slightly lower into the close after posting a new all-time high yesterday. Soybean meal and oil traded weaker as well. July soybeans, however, closed higher and managed to push to a new contract high. A weaker domestic soybean and meal basis plus calendar spread weakness, offered a negative tone to the trade. Soybean basis in processor markets in Iowa tumbled 20 cents today which added to the downside pressure. The sharp move lower in corn and wheat has forced traders to take profits ahead of the holiday weekend. Traders remain concerned that the recent heat in the western Corn Belt may have negatively impacted soybean conditions and yield potential. This was offset by thoughts that soybean yields in the east could be better than expected due to the rainfall earlier this month. Traders believe soybeans could see long term support as export sales data continues to suggest that demand rationing may not be taking place at current prices levels. The US Dollar traded sharply lower and offered slight support to the soybean market.

Brazil soy crop seen at record 82 mln T - AgRural (Reuters)
Brazil's 2012/13 soybean crop, which officially starts planting season in two weeks, is expected to reach a record 82 million tonnes, up from 66.4 million tonnes from the drought-parched crop of this year, local analyst AgRural said on Thursday.

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